What Are Discount Real Estate Brokers and Should I Use One?
Looking to save money on your home sale? We explore the pros and cons of choosing a discount real estate brokerage over a traditional listing agent.
If you’re getting ready to sell your home, you may be wondering how much real estate commissions will affect your bottom line and if you can maximize your profits with a discount broker. Will you really save money with discount real estate brokers? Will you sacrifice value?
The answer depends on your unique situation, how much time you have to spend on your home sale, and your expectations.
To Calculate Your Commission Fees, Start With a Home Value Estimate
Tell us a little bit about your property and we’ll provide you with a quick home value estimate. Then you can calculate your estimated real estate agent commission fees as a percentage of property value.
In this article, we spoke with top-performing agents Robert Dombrowsky, who works with over 85% more single-family homes than the average Fair Lawn, New Jersey agent, and Rick Ruiz, who sells homes nearly 46% quicker than the average Las Vegas agent, to understand the advantages and disadvantages of using a discount broker and compare services and costs against those of a full-service real estate agent.
Let’s get started.
What is a discount real estate broker?
A discount real estate broker is a company or agent that will sell your home for a lower commission than a traditional real estate agent or Realtor®. Discount brokerages offer sellers basic real estate services at a pre-negotiated lower rate of 1% to 2% listing commission or a flat fee.
Historically, the average real estate commission rate has been 6% of the home’s sale price, typically paid by the seller and split between the listing and buyer’s agents. However, the 2024 National Association of Realtors (NAR) settlement reshaped the commission structure, leading to changes in both the percentage and payment responsibility.
Under the new rules, buyers are expected to negotiate directly with their agents. Despite this shift, some sellers still choose to cover the buyer’s agent fees to attract buyers or expedite the sale. If a seller opts not to pay the buyer’s agent’s fee, they only pay their listing agent, usually around 3% of the home’s sale price. If they agree to cover both agents, the total commission may be up to 6%, depending on negotiations.
According to recent NAR data, the median home price in the U.S. is $406,100. If the seller covers only the listing agent’s fee, the cost would be approximately $12,183 (3% of the price). However, if they also cover the buyer’s agent’s fee, the total could rise to $24,366 (6% of the price).
With a discount brokerage like Redfin, which charges a 1% listing commission, sellers typically pay around 4% in total commission (1% for the listing agent and 3% for the buyer’s agent), amounting to $16,244 on a $406,100 home sale. Sellers are able to save more when they choose not to cover the buyer’s agent’s commission, reducing their fees to just $4,061.
